The German naval shipbuilding industry is comprised of numerous yards, however only Howaldtswerke-Deutsche Werft (HDW) and Thyssen-Nordseewerke (TNSW) have experience in the construction of submarines. In late 2004, HDW was acquired by ThyssenKrupp, forming the new group ThyssenKrupp Marine Systems (in which Bank One, HDW's previous owner, retains a 25% stake). ThyssenKrupp Marine Systems includes HDW, Sweden's Kockums, and Hellenic Shipyards in Greece.[1,2]

As orders from the German Navy have not been sufficient to sustain existing capacities and merchant shipbuilding activities have met with less success, German naval shipyards have exported submarines to countries all over the world.[3] Within the past five decades, 36 submarines were produced for the German Navy, while 102 completed vessels or material components were delivered to other navies.

ThyssenKrupp Marine Systems

ThyssenKrupp offers three types of submarines for export:

• Type 209: diesel-electric patrol submarines, produced since 1974 in various versions;
• Type 212A: hybrid diesel-electric/AIP submarines, with an AIP system based on fuel cell technology;
• Type 214: hybrid diesel-electric/AIP, long-range submarines incorporating successful design features from Type 209 and 212A boats as well as the Dolphin-class, which are diesel-electric boats tailored to Israel's demands.[4,5,6]

The most recent contract concluded by ThyssenKrupp is for the construction and sale of two Dolphins to Israel. Although the German government had rejected a deal to export additional submarines to Israel in November 2003, outgoing Chancellor Gerhard Schroeder approved the sale of two Dolphin-class submarines to Israel in November 2005, for a total of €1 billion ($1.17 billion).[7,8,9]  This deal was struck in the final days of Schroeder's government prior to Angela Merkel becoming Chancellor.[9]  Berlin is ready to provide up to €333 million in funding from the German federal budget; Israel will fund the remaining costs.[10]  The new boats are expected to include advanced AIP technology and a hull design improving the cramped quarters.[11] Like the Dolphins purchased by Israel in the past, the new boats will be equipped with 650mm torpedo tubes—again leading to much speculation that the Israelis intend to outfit the submarines with nuclear-armed cruise missiles.[10]

In additional to sales, ThyssenKrupp Marine Systems also retrofits submarines with its fuel cell AIP system via a plug-in extension, undertaken during a significant overhaul or refurbishment.[12] The refit significantly increases a submarine's submerged capabilities.

ThyssenKrupp's HDW and TNSW have extensive experience in submarine development, design, modernization, as well as logistic support and financing services.[13,14,15] They provides crew training, including tactical maneuvering, and simulator technology in coordination with the German Navy and other NATO navies.[14,15,16,17] ThyssenKrupp also overhauls and modernizes submarines.  In December 2003 two of Israel's decommissioned Gal-class submarines arrived in Kiel for refits and modernization; they are to be reactivated for the Israeli Navy.[18]

ThyssenKrupp Marine Systems was formed in late 2004 when the German industrial conglomerate ThyssenKrupp, the owner of TNSW, acquired HDW[1,2] Even before this merger, HDW was the world's largest and most advanced producer of hybrid diesel-electric/air independent propulsion (AIP) submarines.  HDW has supplied the majority of the diesel-electric submarines currently operating in Western navies. Before their union, TNSW had already been cooperating with HDW and Ferrostaal (FS) as the German Submarine Consortium (GSC), on the production of a number of vessels, including three Type 209/1400M for the South African Navy. FS is responsible for marketing and offering structured financing packages and specific offset solutions, such as counter purchase or barter business.[14] Given the heavy budgetary pressures resulting from large procurement deals, importing countries are interested in maximizing the involvement of existing or new domestic enterprises.[19] On April 21, 2004, the GSC signed a contract with the Portuguese Navy for construction of two Type 209 submarines, with an option for a third. The vessels will be tailored for the Portuguese Navy and include AIP capabilities. NATO has criticized the contract, arguing that Portugal has no need for its own submarines.  The offset provisions in the deal were not reported.[20]

In 1999, HDW acquired Kockums, the leading Swedish naval shipyard, which pioneered the development of stealth surface vessels (Visby-class frigates) as well as Stirling AIP systems for submarines.[21,22]

In 2001, HDW took over the Hellenic Shipyard in Skaramanga, Greece, preventing acquisition of the yard by a competitor and concomitant copyright infringement, as four Type 214 boats were scheduled to be built there. In 2002, HDW announced its cooperation on both merchant and naval shipbuilding with Izar, Spain’s largest shipyard.[23,24] In the same year, HDW also signed an agreement with Italy’s Fincantieri, extending merchant and naval shipbuilding as well as marketing cooperation. The agreement included the development and marketing of small submarines with less than 700 tons displacement and the institution of Fincantieri as HDW's preferred yard to address contract overloads of boats with more than 1,000 tons displacement.[25] The two companies previously collaborated on the construction of Type 212A submarines for the Italian Navy.

As a result of its market position and products, HDW attracted both competitors and investors. In 2002, Chicago-based Bank One acquired an initial 50 percent stake in HDW, which it gradually increased to complete ownership.[26,27] Bank One soon expressed an interest in selling HDW, since it had regarded its engagement as a financial investment opportunity. Some believe the restrictive export policies of the German government contributed to Bank One’s interest in divesting itself from HDW, as an explicit prohibition by the German government had made it clear that a lucrative submarine sale or technology transfer to Taiwan was unlikely to materialize. Bank One seems to have anticipated a more favorable interpretation of arms export guidelines when engaging in HDW.[5,28,29]

TNSW had less success in its independent operations, although it had exported vessels to Norway and Argentina.  The yard nevertheless has experience in submarine development, design, and modernization both through these independent exports, as well as through joint production with HDW for the German, South African and Israeli Navies.[30] Unlike HDW, TNSW chose a closed-cycle diesel technology for its AIP system, but was unsuccessful in marketing it, as it has yet to be not employed by any navy.[31] The yard was also developing mini-submarines with less then 500 tons displacement, to be equipped with this AIP system.[32,33]

The fact that before the merger TNSW was unable independently to design or produce submarines in excess of 500 tons displacement, and instead chose to cooperate with HDW, is indicative of the intense competition resulting from excess capacities in submarine producing countries. By allying with each other, the companies were able to stop competing against each other and received more effective support from German authorities, including embassies and the German Navy.[34] The lack of support by serving German officials had been cited as one reason why Kockums had been chosen in 1987 to deliver the Australian Collins-class submarines.[35] This problem seems to have been successfully addressed, as the cooperation between industry, the diplomatic service, and the government demonstrated in the conclusion of the export deal with South Africa in 2002.[36] Such cooperation has been called vital to sustaining the privately held German shipbuilding industry and knowledge base, especially given the export restrictions faced by the industry.[37] It also helps to explain why the German government strongly supported the sale of HDW to ThyssenKrupp, returning the control of the former company to German hands.

GERMAN SUBMARINE EXPORTS

Sources:
[1] "Pipe Dreams Aboard," Economist, October 30, 2004, p. 67.
[2] "Germany Forces Shipyard Alliance," Military Technology (Bonn), Vol. 28, No. 11 (November 2004); in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[3] Dieter Hanel, "The German defense industry," Military Technology, August/September 2003, Vol. 27, No. 8/9, pp. 19-30; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[4] "HDW wird grosster Hersteller von U-Booten," Frankfurter Allgemeine Zeitung, 23 September 1999; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com.
[5] Uta Harnischfeger, "Groups battle to control HDW," Financial Times, 9 July 2003; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com.
[6] Anthony Watts, Jane’s Underwater Warfare Systems: 2003-2004 (Coulsdon: Jane’s Information group, 2002) pp 31-47.
[7] "U-Boot-Lieferung vorerst gestoppt," Focus online edition, http://focus.msn.de, November 23, 2003.
[8] Ingo Preissler, "Nur ohne atomare Ausrüstung," Berliner Zeitung online edition, http://www.berlinonline.de/berliner-zeitung/_html/index.html, November 7, 2003.
[9] "German Government Approves Sale of Submarines to Israel," Der Spiegel, November 20, 2005; in FBIS Document EUP20051120014001.
[10] Hinnerk Berlekamp, "U-Boote Atomwaffenträger für Israel?" Berliner Zeitung, January 30, 2006; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com.
[11] Alon Ben-David, "Israel Looks to Acquire more German Submarines," Jane's Defence Weekly, November 25, 2005.
[12] Anthony Watts, "Upgrading Type 209 submarines with AIP," International Defense Review online edition, http://idr.janes.com, 1 October 2001.
[13] "Marineschiffbau," HDW Web Site, http://www.hdw.de.
[14] "Naval Systems and Submarines," MAN Ferrostaal Web Site, http://www.ferrostaal.de.
[15] "Aktuelles," German Navy Web Site, http://www.deutschemarine.de.
[16] "Ship profile (III): INs Dolphin," Naval Forces, 1998, Vol. 19, No. 6, pp. 62-77; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[17] Interview with Dirk Rathjens, HDW Board of Directors Member, by Manfred Sadlowski, "HDW -- a shipyard armed for the future," Naval Forces, 1999, Vol. 20, No. 1, pp. 60-66; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[18] A.D. Baker III, "World's Navies Are in Decline," US Naval Institute Proceedings, Vol. 130, No. 3 (March 2004), p. 32; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[19] "Strong partnership for exports Ferrostaal and the German Naval Group," Naval Forces, 2002, pp. 46; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[20] "Portuguese Navy Inks Deal For Type-209 Submarines," Sea Power, June 2004, Vol. 47, No. 6, p. 45; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[21] "Visby Class corvette," Kockums Web Site, http://www.kockums.de.
[22] "The Kockums Stirling AIP system," Kockums Web Site, http://www.kockums.de.
[23] "HDW/Ferrostaal kaufen Hellenic Shipyards," Pressearchiv 2001, 12 October 2001, HDW Web Site, http://www.hdw.de.
[24] "HDW vereinbart Zusammenarbeit mit der spanischen Izar-Gruppe," Pressearchiv 2002, 24 January 2002, HDW Web Site, http://www.hdw.de.
[25] "HDW und Fincantieri unterzeichnen Abkommen uber Zusammenarbeit," Pressearchiv 2002, 29 April 2002, HDW Web Site, http://www.hdw.de.
[26] "Kunftige Eigentumsverhaeltnisse bei HDW weiter unklar," Deutsche Presse-Agentur, 3 March 2003; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com.
[27] Herbert Fromme, Kirsten Bialdiga, "Unsicherheit um Zukunft von HDW-Werft," Financial Times Deutschland online edition, http://www.ftd.de, 18 December 2002.
[28] "'Handelsblatt': OEP will Kieler HDW-Werft wieder verkaufen," Agence France Presse, 25 February 2003; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com.
[29] "OEP wants to divest HDW, now seeking buyers – report," AFX European News, 25 February 2003; in Lexis-Nexis Academic Universe, http://web.lexis-nexis.com.
[30] "Yesterday, today, tomorrow," Thyssen-Nordseewerke Web Site, http://www.thyssen-nordseewerke.de/e/prod/hist_marine.html.
[31] "Air-independent propulsion systems," Thyssen-Nordseewerke Web Site, http://www.thyssen-nordseewerke.de/e/prod/fe_aip_ccd.html.
[32] "Class TR200 submarine," Thyssen-Nordseewerke Web Site, http://www.thyssen-nordseewerke.de/e/prod/tr200.html.
[33] "Class TR300 submarine," Thyssen-Nordseewerke Web Site, http://www.thyssen-nordseewerke.de/e/prod/tr300.html.
[34] "Consortia and partnerships of the German shipbuilding industry," Naval Forces, 1997, Vol. 18, No. 4, pp. 66; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[35] Derek Wollner, "Procuring change: how Kockums was selected for the Collins class submarine," Research paper No. 3, 2001-2002, Information and Research Services, Department of the Parliamentary Library Web Site, http://www.aph.gov.au/library/pubs/rp/2001-02/02RP04.pdf.
[36] Werner Schrottelndreyer, "Prospects of naval shipbuilding in Germany," Naval Forces, 2002, Vol. 23, pp. 65-70; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.
[37] Wolfgang Legien, "German naval industry," Naval Forces, 2001, Vol. 22, No. 6, pp. 29-33; in ProQuest Information and Learning Company, http://proquest.umi.com/pqdweb.